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30 Aug 2022

Patrick Lee, Legal Consultant, Center for Alliance of Labor and Human Rights (CENTRAL)

Japan’s new Guidelines for Respect for Human Rights lack the teeth to be truly effective in promoting respect for human rights in global supply chains

Nick Youngson CC BY-SA 3.0 Alpha Stock Images

If the Japanese Government truly hopes to promote better respect for human rights by companies doing business in Japan, then its new Guidelines for Respect for Human Rights in Responsible Supply Chains (the Guidelines) should be made legally binding for large companies, who must be responsible for providing remedy to workers in their global supply chains when they experience human rights abuse.

The new Guidelines request all companies (including sole proprietors) engaging in business activities in Japan to establish human rights policies, conduct human rights due diligence and provide remedy when they cause or contribute to adverse human rights impacts. The Guidelines are to be applied globally, including in overseas supply chains. They cover all rights included under the International Bill of Human Rights and the principles concerning fundamental rights set out in the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work. In particular, the Guidelines set out that even where the laws and regulations or enforcement of a country do not appropriately protect human rights, businesses need to “seek ways to respect internationally recognised human rights to the greatest extent possible.” This is extremely important in manufacturing countries where overseas supply chains are generally located and rule of law is often weak.

The Guidelines also refer to provision of remedy. This can be in the form of “apologies, restitution, rehabilitation, and financial or non-financial compensation.” They state that where a company recognises it caused or contributed to adverse human rights impacts, that company should implement a remedy or cooperate in implementation of a remedy. However, where adverse human rights impacts are only “directly linked” to the business, the Guidelines state that the company is not responsible for implementing a remedy. Instead, the company is only requested to utilise its leverage or provide other support to prevent or mitigate adverse impacts. This would seem to apply to most global supply chains where suppliers are not owned by purchasing companies. For example, Japanese clothing giant Fast Retailing has a total of 60 factories named on its latest Garment Factory and Processing Factory list, located in Bangladesh, Cambodia and China. Per the Guidelines, Fast Retailing would likely not be responsible for providing any remedy to workers for adverse human rights impacts at those factories as they are merely “directly linked” to the company and were actually caused by the factory themselves. As such, Fast Retailing seemingly won’t be responsible under the Guidelines for the US$5.5 million owed to workers at the Jaba Garmindo factory in Indonesia, nor for the dismissal and subsequent criminal charges against independent union leaders at Monopia factory in Cambodia.

Regardless of whether or not companies like Fast Retailing would be responsible for the sorts of cases listed above, the Guidelines are not legally binding. There is no sanction nor punishment for companies which fail to comply with them. In a sense, this is understandable by nature of the Guidelines’ extremely broad scope: it applies to all businesses operating in Japan, including sole proprietors. Indeed, it would be wholly unrealistic to expect sole proprietors, small businesses and even many medium-sized businesses to have the necessary resources to fully comply, and particularly in a way that makes a meaningful impact on respect for human rights. But for larger corporations such as Fast Retailing, there is no shortage of resources. Not only that, the enormous potential for adverse human rights impacts in the global supply chains of massive companies is totally incomparable to that of sole proprietors and small businesses, such that voluntary measures are insufficient and requirements must be made legally binding. Voluntary measures risk encouraging surface-level compliance that doesn’t hold up to actual scrutiny or make any real impact. Large corporations have been dragged kicking and screaming to the table on corporate social responsibility and human rights due diligence, and companies going above and beyond to fully comply with voluntary guidelines will always be the exception, not the rule.

While these new Guidelines appear to be very well-intentioned, one would be naïve to believe they will make any significant impact on respect for human rights, particularly for workers in global supply chains. The genuine, meaningful and positive effects that the Japanese Government hopes to see come from implementation of these Guidelines will only be seen when large corporations are legally compelled to comply under threat of severe civil sanction if they fail to do so. Until then, it seems global supply chain workers like those at Jaba Garmindo and Monopia will go on waiting for remedy.